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1. A 10-percent tax is levied on the sale of soft drinks. This tax is collected from the sellers of the drinks. A critic
1. A 10-percent tax is levied on the sale of soft drinks. This tax is collected from the sellers of the drinks. A critic of the tax argues that the sellers will shift the entire tax to the buyers and therefore be no worse off. Is this correct and if not why not? What market conditions (elasticity of demand) would determine whether buyers or sellers wind up absorbing the cost of this tax?
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